Another day, another record high.
We''ve had 54 record closes in 220 market days so barely a week has gone by this year without a fresh record high but don't call it a bubble – because this is how the market will just go from now on and we'll all be Billionaires when we retire and the Fed is worried that inflation will be TOO LOW.
The key to what went wrong for the forecasters this year was the lack of inflation, something Federal Reserve Chairwoman Janet Yellen has described as a “mystery.” As the year went on, investors became increasingly convinced that inflation would stay dormant, bringing down long-term bond yields and the dollar even as decent economic growth boosted profits and stock prices.
Sure, something in this narrative doesn't add up but that's why Greenspan called it "irrational exuberance" last time something like this happened but he called it way too early and the market went on to add another 100% after that. Perhaps that's why forecasters are now very gun-shy about calling a market top here – they could be 100% wrong by the end of next year, when we're at S&P 5,000.
As noted earlier in the week, we got a bit more bullish in November as there doesn't seem to be any way this market is going down at the moment. We still have our hedges and we still have plenty of CASH!!! (have I mentioned how much I like CASH!!! lately?) but we are quick to pick up bargains when they present themselves – just in case this party never stops and we need some fresh horses to run with.
This morning, in our Live Member Chat Room, we took a long poke on the Dolar (/DX) at 93 and we'll see how that goes. We're hearing chatter about strong Black Friday Retail Sales numbers and, if true, that would indicate more demand for Dollars than is being priced in. The Dollar is often artificially pushed down in order to boost things that are priced in Dollars like oil and stocks and it's much easier to manipulate the currency on slow holidays – when most of the honest traders are off-duty. We're hoping for a nice little bonus next week if things reverse back to "normal."